China's Biotechnology Development: the Role of US and Other Foreign
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China’s Biotechnology Development: The Role of US and Other Foreign Engagement A report prepared for the U.S.-China Economic and Security Review Commission February 14, 2019 Gryphon Scientific, LLC Rhodium Group, LLC 6930 Carroll Avenue, Suite 810 5 Columbus Circle Takoma Park, Maryland 20912 New York, NY 10019 Mark Kazmierczak, Ph.D. Thilo Hanemann Ryan Ritterson, Ph.D. Daniel H. Rosen Danielle Gardner Rocco Casagrande, Ph.D. [email protected] [email protected] [email protected] [email protected] 301-270-0374 212-247-3997 Disclaimer: This research report was prepared at the request of the U.S.-China Economic and Security Review Commission to support its deliberations. Posting of the report to the Commission's website is intended to promote greater public understanding of the issues addressed by the Commission in its ongoing assessment of U.S.-China economic relations and their implications for U.S. security, as mandated by Public Law 106-398 and Public Law 113-291. However, it does not necessarily imply an endorsement by the Commission or any individual Commissioner of the views or conclusions expressed in this commissioned research report US Role in China’s Biotechnology Development CONTENTS Executive Summary 2 Introduction 9 1. China’s Biotechnology Sector 12 1.1. Current State of China’s Biotechnology Industry by Segment ....................................................... 13 The Biotechnology Market at a Glance .................................................................................. 13 Biologics (Biopharmaceuticals) .............................................................................................. 15 Genomics, Molecular Diagnostics, and Precision Medicine ................................................... 25 Agricultural Biotechnology ...................................................................................................... 27 Industrial Biotechnology ......................................................................................................... 33 1.2. China’s Plans and Goals for Biotechnology ................................................................................... 35 China’s Science and Technology Programs .......................................................................... 35 The Strategic Emerging Industries Initiative ........................................................................... 36 The 12th and 13th Five-Year Plans .......................................................................................... 36 Made in China 2025 ............................................................................................................... 38 Talent Programs ..................................................................................................................... 38 Biotechnology Parks ............................................................................................................... 39 Local level Policies ................................................................................................................. 40 1.3. Comparison of Chinese and US Biotechnology Programs ............................................................. 41 Comparison of Industrial Policies ........................................................................................... 41 Comparison of Biotechnology Spending ................................................................................ 41 1.4. Outlook ............................................................................................................................................ 42 2. The Role of Foreign Firms and Technologies in China’s Biotechnology Development 45 2.1. Foreign Investment in China ........................................................................................................... 46 Direct Investment .................................................................................................................... 46 Venture Capital and Other Portfolio Investment ..................................................................... 49 Overseas Listings ................................................................................................................... 53 2.2. Chinese Outbound Investment ....................................................................................................... 55 Direct Investment .................................................................................................................... 55 Venture Capital and Other Portfolio Investment ..................................................................... 59 2.3. Other Channels ............................................................................................................................... 62 Patent Acquisitions and Licensing .......................................................................................... 62 Research Partnerships and other Collaborations ................................................................... 63 Overseas Scientists ................................................................................................................ 66 2.4. Espionage and Other Illicit Activities ............................................................................................... 68 2.5. Regulatory Supervision of Foreign Interaction with Chinese Biotech Firms and Individuals ......... 71 3. Chinese Investment in the US Biotechnology Industry 73 3.1. Annual Flows and Stock ................................................................................................................. 74 3.2. Entry Mode ...................................................................................................................................... 76 3.3. Investor Mix ..................................................................................................................................... 77 3.4. By Segments ................................................................................................................................... 80 Biologics ................................................................................................................................. 82 Contract Research or Manufacturing...................................................................................... 85 Genomics and Related Technologies .................................................................................... 87 Molecular Diagnostics and Precision Medicine ...................................................................... 89 Research/Discovery Platforms, Tools and Support Products ................................................ 91 i US Role in China’s Biotechnology Development Industrial Bioproduction and Bioprocessing ........................................................................... 92 Agricultural or Agriculture-Applicable Biotechnology .............................................................. 94 Biotech Incubators/Accelerators ............................................................................................. 96 3.5. US Regulation of Foreign Investment ............................................................................................. 97 3.6. Outlook .......................................................................................................................................... 100 4. China’s Involvement in U.S.-Based Research Organizations 103 4.1. Types of Partnerships ................................................................................................................... 103 Research and Development Centers ................................................................................... 104 Biotechnology Incubators ..................................................................................................... 105 Other partnerships ................................................................................................................ 106 4.2. Chinese Students and Academic Research in the US ................................................................. 107 China’s Talent Programs ...................................................................................................... 107 University partnerships ......................................................................................................... 109 4.3. Benefits and Risks ........................................................................................................................ 110 Role of U.S. government in regulating international research .............................................. 112 5. China’s Access to U.S. Healthcare-Related Data 115 5.1. Healthcare Data and Biotechnology ............................................................................................. 115 Genomic Data ....................................................................................................................... 116 5.2. China’s Investments in Modernizing Collection of Healthcare Data ............................................. 117 China’s Improvements in Data Infrastructure ....................................................................... 119 5.3. Channels of Access to US Healthcare Data ................................................................................. 120 Chinese Investment in US Healthcare Data Companies ..................................................... 120 Chinese-US Partnerships ....................................................................................................